Is XPeng Stock A Buy Right Now? Here's What Earnings, Charts Show – Investor's Business Daily

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Several electric-vehicle makers, including Chinese EV startup XPeng (XPEV), accelerated in 2020 as total EV sales in China surpassed 1 million for the year. XPeng stock had a breakout year, rising more than 100% through December after a multibillion-dollar debut on the NYSE in August. But so far in 2021, shares have stumbled amid a broad market rotation away from tech growth stocks into more cyclical industry groups.

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Over the long haul, the future looks bright for EV makers. Analysts are bullish about both China EV sales and global EV sales. In 2021, EV sales are expected to rise more than 30% to 1.8 million units in China, according to the China Association of Automobile Manufacturers. Globally, EV sales are expected to rise 70% in 2021, according to IHS Markit. Should investors consider buying XPeng stock?

Currently, the stock market is in a confirmed uptrend, which means it’s a great time to identify top contenders for your portfolio and buy some stocks. Investors should seek out leading stocks in leading industry groups that are outperforming the market.

Now the question is, does XPeng stock deserve a spot in your portfolio or on your watchlist?

Outlook For XPeng, EV Stocks

Several new EV stocks emerged in the wake of leader Tesla (TSLA), including Nikola (NKLA), Workhorse Group (WKHS) and Hyliion (HYLN), as well as XPeng and China EV startup peer Nio (NIO).

Additionally, several legacy automakers are in the process transitioning to hybrid-electric mobility, including General Motors (GM), Ford (F) and Ferrari (RACE). Each of these major automakers laid out plans for EV production and sales in China and around the world.

As the competition heats up, XPeng has been expanding operations to fend off Tesla and other major players in the EV market.

In 2020, the company more than doubled its volume of vehicles delivered versus 2019, to 27,041. The firm also recently introduced a sedan model in hopes it’ll be a significant driver of sales growth.

After its launch in early 2020, XPeng’s P7 sports sedan quickly reached a total of 20,000 deliveries and surpassed the G3 compact SUV as the firm’s most popular vehicle. This was a major milestone for XPeng because it became the fastest vehicle to reach 20,000 deliveries of any Chinese EV startup.

But Xpeng stock has been under pressure since February after China announced it’s going to cut EV subsidies. A subsequent sell-off in group leader Tesla’s stock over the past several weeks also hurt the China EV company, whose shares slipped over 35% from their February highs.

XPeng Technical Analysis

XPeng stock formed an IPO base shortly after it debuted in August 2020. From there, the stock had a successful breakout from a 25.10 buy point.

Shares soared past 74 until they peaked Nov. 24. The stock lost about two-thirds of its market value before bottoming at roughly 25 in early March. The sell-off slowed after the company reported earnings on March 8. Since then, shares have rebounded significantly.

The stock still remains below the 50-day moving average, and there is no proper base so far, according to MarketSmith chart analysis.

XPeng stock maintains a lower-than-ideal Relative Strength Rating of 65, which is below the minimum of 80 for growth stock contenders.

With the relative strength line trending higher, XPeng is improving from a relative strength perspective. Still, investors should wait for a proper base to develop.

XPeng Stock By The Numbers And Ratings

XPeng reported mixed fourth-quarter results March 8. Since then, shares gained more than 51%. Earnings for the December-ended quarter missed Wall Street projections but revenue exceeded estimates. The company lost 15 cents a share as revenue surged 345.5% to $437 million. Analysts expected a loss of 12 cents a share on revenue of $411.38 million, according to Yahoo Finance.

Xpeng reported selling 12,964 vehicles in the fourth quarter of 2020, up 303% year over year, and delivered a total 27,041 vehicles in 2020, up 112%. But in early March, the EV maker reported February deliveries far below January’s total, amid the Lunar New Year holiday. Deliveries fell to 2,223 from 6,015 in January.

The company expects Q1 deliveries of 12,500 vehicles, up about 450% vs. a year earlier. Analysts see 2021 EPS falling 11% for XPeng. But they estimate a 45% gain for 2022.

“We closed 2020 on a strong note, with a record number of total deliveries in the fourth quarter of 12,964 vehicles, led by the P7, our second Smart EV model, which fueled our robust operational and financial performance throughout the year,” said He Xiaopeng, CEO of XPeng.

“We proudly offer our customers a revolutionary in-car voice system and smart cockpit technology, as well as XPILOT 3.0, our self-developed full-stack autonomous driving system, and we are poised to launch our LIDAR-equipped third Smart EV model in the second half of 2021,” he added.

Is Xpeng Stock A Leader Or Laggard?

According to IBD Stock Checkup, Xpeng stock ranks No. 12 in terms of Composite Rating within the auto manufacturers industry group. Of the 27 stocks in the group, XPeng ranks third to last in terms of price performance so far this year. Shares are down roughly 12%. This indicates that the stock is very much trailing the leaders. Given its position relative to its peers, it’s safe to say that XPeng is not a leading stock.

Is XPeng Stock A Buy?

XPeng stock should not be bought right now, based on its fundamentals and weak chart. Investors want to prioritize stocks that have seen growth of at least 25% in earnings and sales in recent quarters. XPeng doesn’t yet have a profit; the company is still in an early growth-focused phase.

Despite its strong 2020 price performance, XPeng stock has dropped over 10% in 2021 as volatility remains a point of contention for investors. Shares also have yet to form a new proper base since the initial IPO base.

XPeng stock is not one to be added to your portfolio right now. Investors will need to wait for the stock to form a better chart pattern and gain fundamental strength. However, the Chinese EV maker is one to add to your watchlist in the meantime. Also, investors can check IBD stock lists and other IBD content to find the best stocks to buy or watch.

Follow Fox on Twitter at @foxonstocks for more commentary on XPeng stock and other market insights.

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